Is the Party Over for These Mortgage REITs?

Mortgage real estate investment trusts have been a favorite among investors seeking some of the highest-paying dividends in the investment world. But is the dividend party about to end?

Anwar Elgonemy is the author of the new book Skin in the Game: The Past, Present, and Future of Real Estate Investments in America. In part one of my interview, he explained two hidden threats to mortgage REITs and shared why he believes Capstead Mortgage, Chimera Investment Corp., and PennyMac Mortgage are undervalued.

In this audio segment, he analyzes the biggest misconception about mortgage REITs as well as the three primary reasons for investors to own them. After identifying two mortgage REITs he believes are overvalued (including one with a "heart-burning valuation"), Elgonemy shares the one thing investors should always keep in mind about mortgage REITs and their huge dividends.

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Chris Hill does not own shares of any of the companies mentioned. The Motley Fool owns shares of Annaly Capital Management. Motley Fool newsletter services have recommended buying shares of Annaly Capital Management. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On April 23, 2012, at 5:25 PM, LuizDL wrote:

    Part two of this interview is fantastic! I especially liked Anwar Elgonemy's comments about the misconceptions of investing in REITs. Very wise and prudent responses.

  • Report this Comment On April 23, 2012, at 5:32 PM, IvanesivecW wrote:

    I agree with LuizDL. I really liked his responses to Chris Hill's tough questions. Anwar Elgonemy is a true real estate expert. I look forward to more interviews with him!

  • Report this Comment On April 25, 2012, at 12:12 PM, JWL007 wrote:

    Great interview. Love his answer, 3 points, to why investors should look to invest in REITs. Very insightful comments. I agree completely that REITs are not for regular trading. Recently saw on Sacramento Bee that Mr. Elgonemy's book is on top of Robert Rubin's (former US Sec of Treasury) reading list. Gotta get his book.

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